HMRC Admit PAYE Code Problems

HM Revenue & Customs (HMRC) have admitted that thousands of employees have been issued with incorrect PAYE code numbers as a result of Real Time Information (RTI) teething issues relating to the new employee starter and leaver processes.

Some PAYE codes have not been correctly restricted to take into account employment benefits in kind normally reported on forms P11D such as medical insurance, company car benefits, etc, whilst others have been issued on the basis they give no Personal Allowance at all, and collect tax from employee salaries at the flat basic rate (20%) or flat 40% rate of tax. So in certain cases, this will lead to the under deduction of tax and in certain cases too much tax will be paid.

Employees should be encouraged to check their PAYE codes in detail and contact HMRC if discrepancies are found, otherwise if the incorrect PAYE codes remain in place, large under or over deductions of tax will mount up.

PAYE Tax Codes

Click here for an HMRC link for further information on PAYE tax codes.

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As had been expected, the 2018 Spring Statement update did not include any major tax policy announcements; rather it provided a number of consultations that suggest potential legislative changes in the future. Read more about the areas set for exploration here.